Financial_Calculator_Reference.pdf

# Financial_Calculator_Reference.pdf - Revised Pages APPENDIX...

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Using the HP 10B and TI BA II Plus Financial Calculators This appendix is intended to help you use your Hewlett- Packard HP 10B or Texas Instruments TI BA II Plus financial calculator to solve problems encountered in an introductory finance course. It describes the various calculator settings and provides keystroke solutions for nine selected problems from this book. Please see your owner’s manual for more complete instructions. For more examples and problem-solving techniques, please see Financial Analysis with an Electronic Calculator, 7th edition, by Mark A. White (New York: McGraw-Hill, 2007). CALCULATOR SETTINGS Most calculator errors in introductory finance courses are the result of inappropriate settings. Before begin- ning a calculation, you should ask yourself the following questions: 1. Did I clear the financial registers? 2. Is the compounding frequency set to once per period? 3. Is the calculator in END mode? 4. Did I enter negative numbers using the key? Clearing the Registers All calculators have areas of memory, called registers, where variables and intermediate results are stored. There are two sets of financial registers, the time value of money (TVM) registers and the cash flow (CF) registers. These must be cleared before beginning a new calculation. On the Hewlett-Packard HP 10B, pressing {CLEAR ALL} clears both the TVM and the CF registers. 1 To clear the TVM registers on the TI BA II Plus, press 2nd {CLR TVM} . Press 2nd {CLR Work} from within the cash flow worksheet to clear the CF registers. Compounding Frequency Both the HP 10B and the TI BA II Plus are hardwired to assume monthly compounding, that is, compounding 12 times per period. Because very few problems in intro- ductory finance courses make this assumption, you should change this default setting to once per period.

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